Environmentalism at Odds with Free Trade?

At the inaugural meeting of the World Trade Organization (WTO) Ministerial Conference in Singapore last December, proponents of linking strict international environmental standards clashed with supporters of free trade. It is a conflict that is expected to continue and intensify in the years to come.

In a dramatic role reversal, it was the industrialized nations, which long have advocated reducing trade barriers, who pushed for the adoption of global green standards. And it was the underdeveloped countries, once so protective of their own markets and industries, who emerged as the champions of free trade.

Representatives of developing nations made little secret of their rejection of any initiative put forward by developed countries, notably the U.S. and the European Community (EU), which they view as “eco-colonialism.” The most succinct expression of this sentiment came from the host of the WTO meeting, Prime Minister Goh Chok Tong of Singapore, who urged his guests to “discuss green standards against the larger context.”

That context, says William H. Lash III in a recent paper for the Center for the Study of American Business (CSAB), involves poorer countries’ efforts to close the economic gap that separates them from wealthier nations. Lash notes that environmental labeling (also known as “eco-labeling)--the practice of providing information on recyclability, biodegradability, or “environmental friendliness” of a product on an affixed label--could create a pernicious trade barrier. “Eco-labeling,” he writes, “assumes that there is a harmonized global standard of production, but any (perhaps most) production processes for competing products vary with the nation of origin.”

“There is the legitimate concern that developed states, the ones pushing for eco-labeling, will use this process for excluding competing products from developing states,” he observes. “The West has no right to insist that developing countries rush headlong into closing the gap in environmental quality before they close the gap in economic development,” Lash explains.

The issue of free trade versus global environmental standards was not resolved at Singapore. WTO members have formed a Committee on Trade and the Environment (CTE) to study the relationship between these issues. At the very least, they now know they have a hot potato on their hands.

PF: The complete text of the CSAB’s report on the environment and free trade is available through PolicyFax. Call 847/202-4888 and request document #????????.